Calculation of year-end adjustment of personal income tax and additional tax due from the worker or pensioner

The employer or the institution to make year-end tax adjustment. It is a final calculation of personal income tax and additional tax due from the worker or pensioner, who should make the request in order to receive any tax deductions or communication of other income. Let's see why.

Employers, as withholding agents are called each year to conduct a performance summary both fiscal and contributory: the balance of the year. It is a recalculation of taxes and contributions due on the basis of the income earned during the year, the amount of which becomes certain at the end of the tax year, then in the month of December. To be subject to adjustment are the contributions (INPS or other institution) and taxes (income tax, additional regional municipal) is dependent on the worker that the company itself. This year-end that corrects and adjusts the amounts withheld in paychecks from January to November, both as taxes as contributions paid by the employee.

Equalization fiscal year-end. With the development of the docket of December, the employer has the certain fact of the total annual income received by the employee and this income is calculated on the final amount for the tax on personal income (personal income tax), with additional regional and municipal contributions to INPS or other entity owed. On this income also you calculate the actual amount of tax deductions due, such as deductions for employees, deductions for family responsibilities, which take into account not only the income received but also the number of days worked.

Therefore what has been calculated by the employer on a presumptive basis from January to November in the payroll, on the basis of a presumed income (often one year), and will be calculated at the final in December on wages actually received and there will be precisely adjustment operations, which are in fact the difference between the amount owed and the amount already paid during the year (both for income tax and for the additional contributions for that). This has some fixes that can determine both amounts deposited to the employee that additional amounts due that are manifested in payroll deductions, reducing the equity of the month in which the adjustment is made, generally the paycheck of December.

The equalization tax and payroll deductions. Just because it can often determine the amounts to be paid more (meaning more in payroll deductions) of this adjustment generates skepticism workers. These additional deductions are due, as we have said, the recalculation of taxes (personal income tax and additional regional and municipal) and this means that in the previous eleven month, eleven payroll of the year, were held less tax than those paid on the basis annual income then in fact perceived.

So the employer (or the institution) has retained less tax than they should in the previous months, using as a parameter a presumed income lower than then actually received in the year by the employee (or retired). Obviously, except in special cases where the presumed income of the year is assessed in a much lower this charge additional taxes or returns to normal and is not a fault of the employer or of the person who processes the payroll, be it an Employment Consultant outside, whether it is an unskilled wages within the company.

Even INPS, INPDAP withholding. The fiscal adjustment is a fulfillment to which all are called withholding, not just the employer. Ie they must make the adjustment tax authorities also social security pensions. So even INPS, INPDAP for civil servants and other social security institutions. They are also required to perform the equalization also the receivers.

Equalization tax by 28 February. Article. 23, paragraph 3 of Presidential Decree n. 600 of 1973, states that employers withholding agents must follow the steps of adjustment, not by the end of the year ie 31 December, but by 28 February of the year following the tax period (eg adjustment fiscal 2011 by 28 February 2012). So even if the operation is usually completed by the issuance of payroll in December (with Unique Book to be issued from January 1 to January 16), employers according to the law have until February 28 to carry out the operation equalization tax year, then by the issue of the Unique Book (payroll) for the month of February.

 

Determination of taxable income

Income received. The amounts subject to adjustment recalculation of fiscal year-end are those paid as income to the employee (Article 49 of Presidential Decree no. 917 of 1986, the so-called Income Tax Code, Consolidated income taxes) and income assimilated to it (indicated in art. 50 of the Tax Code), such as fees paid to collaboration on projects (project workers), scholarships, etc..

They are also considered employment income:

- The salaries received as income replacement, such as income assistance, a mobility allowance, allowances paid by the institution for sickness, maternity, sums received by Inail for temporary disability, etc..;

- The remuneration in kind (fringe benefits) for determination of the share in cash and donations;

- The pensions of all kinds, checks equivalent to pensions and interest and revaluations of loans an employee.

 

Work abroad. They must also be taken into account salaries conventional attributed, in place of the actual wage to workers who have worked outside. This activity must take place abroad on a continuous basis, must be exclusive of employment and must be held for a period exceeding 183 days in any 12 months. This is established by the Tax Code art. 51 8-bis.

 

A cash basis until January 12. Article. 51 of the Tax Code provides that the compensation of employees and assimilated paid by January 12, but which are referred to as tax period the year just ended, are to be considered as pertaining to the year ended and the new year. This is called a cash enlarged.

For instance, if a director of a company perceives the reward of 2011 on 12 January 2012, the amount received will be the responsibility of 2011 and not 2012. This also applies to the professionals, they take note on a cash basis. In the case of payments of salaries to employees, the principle adopted is instead of competence. That is, even if as a result of the calculation of Unique Book, which can be calculated by the 16th of the following month, he made the payments for the month of December, the 16 January, the competence of the emoluments paid to employees will always be in December.

Determination of taxable income. Once you have your total income from employment and similar perceived by the employee (or pensioner), the withholding employer (or the institution in the event of the pensioner) must determine the taxable amount for the purposes of calculating taxes. In practice, summed up the income received must subtract expenses deductible from income to get precisely the taxable income on which to calculate the tax personal income tax and the additional municipal and regional due. Article. 10 of the Tax Code provides an exhaustive list of deductible expenses. Among these are for example the social security contributions paid by the worker. So all the sums withheld in payroll as contributions to INPS reduce taxable income tax.

 

Excluded from income and wages tax adjustment

In addition to social security contributions, are exempt from taxation, and therefore are fully or partially excluded from the calculation of personal income tax, which is a monthly basis when the adjustment tax the following fees (Article 51 of the Tax Code):

- The social security contributions paid by the employee, and 100% free fall in tax expenditures for social security contributions;

checks for the household, 100% free;

- Premiums for insurance policies to cover risks arising from occupational injury-free 100%;

- Allowances for meals up to the limit of 5.29 euro per day;

- The trip to Italy up to € 46.48 per day, and the trip abroad up to € 77.47 per day;

- The expenses for the trip to Italy up to € 15.49 per day for the trip abroad and up to € 25.82 per day;

- Transfers in Italy up to € 1,549.37 per annum and abroad up to € 4,648.11 per year.

 

Donations are taxable. The company may decide to grant, during holidays or special occasions such as Christmas or Easter, the sums occasional employees in general or to certain categories of employees. One speaks in this case of occasional donations or subsidies. Similarly, the company may decide to grant an additional amount to a worker during important family situations. From 2008 onwards these payments are taxable and therefore contribute to the formation of the total income of the employee. Earlier in the art. 51 paragraph 2 letter b of the Tax Code provided for the exclusion from taxation of the aforementioned income tax donations within the free of 258,23 €.

Arrears previous years. Are excluded from the year-end tax adjustment also arrears of salary received during the tax year but relating to previous years. Such income is subject to separate taxation. Is applied to the amount perceived the tax rate corresponding to half of the total net income of the taxpayer in the two years preceding the year in which they are received.

Exclusion from the equalization tax. These fees are in the payroll of the employee and are not normally included nell'imponibile of payroll tax. Ie they are paid (in the case of the allowances and reimbursements) or are held to the employee (in the case of social security contributions) without their amount form the tax base for the calculation of Irpef and additional regional and local authorities. So the taxable payroll should not include these amounts. The consequence is that, as the tax calculated in payroll on the basis of presumed income, being already excluded these amounts from the calculation month after month, such payments are not subject to equalization tax. Are therefore neither claims to be able to take credit of the employee or to debt. Are excluded from the tax transactions, which is monthly premium payment.

 

Determination of tax adjustment to tax

Once you determine the taxable income by determining the total income (sum of all income described above, including those possibly further communicated by the employee) and subtracting the same tax expenditures (such as social security), the withholding agent employer or institution must provide for the calculation of gross income tax due, which is obtained by applying to the total income, the income brackets for personal income tax rates in force. Awarded the gross tax for the calculation of annual tax to be paid will be necessary to take account of tax deductions due to the worker: deductions for employee income or deductions for retirement income, deductions for dependent family members (spouse and dependent children).

The communication for the tax deductions. The Decree Law no. 70 of 2011 abolished the obligation to communicate annually on tax deductions which required employees an annual communication to the request of the tax deductions. It is necessary to communicate to the employer's request but then only be communicated any changes (such as the birth of a child), there is no longer obliged to replicate every year communication even in the absence of novelty, change. The worker, however, as we shall see, must apply to the employer to get the fiscal adjustment taking into account some deductions other than the income of employees and their dependents. For more information, see the study on the worker's request for fiscal adjustment.

The employer once obtained the employment income of the employee, once considered any other income reported by the employee, once determined the total income and then subsequently the taxable income due to the reduction by deductible expenses, obtained before the tax Gross and then, minus the tax deductions, the net tax due, then the annual income tax payable by the employee, as well as the final amount of additional regional and municipal payable by the employee. At this point, in addition to the amounts withheld from January to November, the withholding agent also knows the annual sum actually due and may proceed to final tax adjustment.

The calculation Irpef to adjustment. The amounts to an adjustment (which generate a tax credit to be credited or a payroll tax debt to be charged more in payroll) represent the difference between:

- The withholding taxable emoluments paid (so the amounts withheld for each month from January to November);

- And the tax due on the basis of the total amount of the fees themselves, taking into account, as mentioned, tax deductions, pursuant to art. 12 and 13 of Tax Code, and for those charges pursuant to art. 15 of the Tax Code, which are recalculated on the basis of the total amount of the fees themselves, that is, the final taxable income following the disbursement of the month of December.

 

Payment of taxes due to adjustment. Awarded Irpef any amount due to be paid, the employer withholds payroll the amount to the employee and then subsequently done the payment, which is done according to the general principles, ie by the 16th of the following month. So if the operation of adjustment was made on December 31, payment via the F24 tax adjustment payments will be made by 16 January. Obviously, if the operations of adjustment are calculated in the book Act of January, the payment will be made by 16 February.

The income tax on credit. In the case in which instead were withheld in paychecks from January to November figures exceed the income tax actually payable by the worker, the employer or the institution must provide to repay the amount to the credit paycheck in December or adjustment, only to offset these amounts deposited again in F24 with taxes that may be due, payable by the employee or their dependents.

 

The demands of the worker for the fiscal equalization

The employee or retiree must tell your employer or institution, withholding tax, the additional income received or deductions due, that he may take advantage of the monthly deductions and the balance at year-end, rather than having against the tax authorities a tax situation then be specified in the tax returns.

In other words, the employee (or pensioner) must report any other income where it has convenience to behold in payroll deductions (or rate of pension) taxes, then month after month, avoiding tax adjustments in the presentation of the model 730 One or model that translate into large sums of money to be paid with the F24. On the other hand, if the employee (or retired) are incumbent tax deductions is good to use them directly in the payroll (or in the installment of pension) to avoid paying more taxes month after month and then found with a credit in the tax return.

So that at the end of the year is made by the withholding agent, employer or institution, proper taxation and monthly during the fiscal adjustment, the employee must make requests, communications to the employer indicating all the tax deductions due. The Budget of 2008 extended the tax deductions payable as may be required by the worker to his employer and therefore can be included in the fiscal year-end adjustment. Previously, these deductions could not be considered in the calculation of monthly payroll, could not be included in the envelope, and should be considered only in the calculation of the adjustment to tax when submitting the tax return. A definite advantage for workers who now can deduct from their taxes in payroll all the tax deductions.

The additional deductions payable in addition to the deduction for employees is as the possible deduction minimum guaranteed that belongs to the workers who have less than 8,000 euro of income or deduction due to workers who pay their rent. This deduction is in varying degrees according to the rental fee, if that fee-free or conventional canon. A special income tax deduction up to the young worker from 20 to 30 who pay a rent.

An additional tax deduction that it is for many families. It is a further deduction sull'Irpef which adds to the deduction for dependents and which is intended for families with at least four children. This type of deduction is granted on a fixed basis, it is not compared to the period of the year in which they accrue requirements (ie, the birth of his fourth child). Not also increases as the number of children, as well as the fourth son.

Even the spouse legally separated or divorced that, on the basis of a judgment of the court, is periodic maintenance of the check recipient is entitled to a tax deduction. This deduction is actually dedicated to the spouses who perceive only the child support as income. It is not combinable with the deduction for employment. But earner spouse alimony which is also the holder of a worker and income of employees responsible for the choice between the two tax deductions and convenience in case you have to deduct on child support must notify the employer, always acting as withholding agent, normally apply the other deduction, for that employee.

Finally, the worker, in addition to tax deductions, has the right to report to his employer other income that increase its total income, for consideration in the calculation of taxes (income tax, Additional regional and municipal). This request is especially useful to those who has two part-time contracts. For more information on all tax deductions and requests that the worker can perform, see the study on the demands of the worker adjustment in the fiscal year-end.

 

The equalization tax through the 730 or Unique

Beyond what is calculated by the employer or by the institution, as we have mentioned, the employee or retiree has a further chance to make the final calculation of taxes due for the year just ended. And that's even if he has made the request to the employer for any additional income or tax deductions.

To cater to recalculate the taxes due for the year just ended, the employee or retiree can in fact carry out fiscal adjustment, then recalculation of the difference between the amount owed and how much actually already withheld by the employer (or by the institution ) in payroll (or in the installment of pension), by filling in and sending the Model 730 or Model Act of the following year (eg 2012 or Act 730 of 2012), which concerns precisely the revenues generated in the year previous year (2011 in the example).

The operations of the year-end adjustment remains a possibility of the final calculation of the tax due, but in the presence of additional income or expenses or deductions, the balance at year-end is nothing more than a first partial recalculation of taxes. The taxpayer then has one last chance: the submission of the tax return. Obviously, such a presentation is necessary if there are changes to be communicated (and income taxes payable or receivable on credit) to the tax authorities on their income positions than calculated from their employer or by the institution.

So in any case, even if the employer fails to properly carry out the operations of adjustment or in case of error in the calculation of personal income tax and additional regional and municipal authorities, or in the event that the employee or pensioner may boast of additional tax deductions or tax expenditures that reduce the tax due, including, for example tax deductions for medical expenses or all deductions or expenses that can not be included in the adjustment made by the withholding agent, the taxpayer is granted opportunity to regularize its position against the tax authorities, both at the tax debt that tax credit, working recalculation of the tax due in the model 730 or model Act.

The Model 730 or Model Law are presentable by May or June of the following year, directly in person or by relying on a tax assistance center (CAF) or a qualified professional (eg accountant or consultant of the work).

The recovery of income tax credits. The submission of the tax return coincides with the last and final calculation of taxes due. This recalculation can generate further tax to pay the balance, which must therefore be then paid, but also, very often, tax credits, refunds, tax already withheld by the employer (or by the institution) as a result of 'application of all the tax deductions and expenses deductible from the total income. The fundamental difference between the two models of the statement is that the 730 allows for the recovery of tax credits or the payment of taxes due to more balance, through the payroll of July, while the Act does not allow to take advantage of the substitute d 'tax for the payment of the balance of the tax due, or recovery of tax credits.

So the employee who is entitled to tax deductions that generate a tax reduction, it should first of all point out such deductions to the withholding, the employer or institution, so that the latter effects the correct calculation of tax payable ( monthly and year-end balance in December), avoiding too many to be considered tax deductions and then there is a subsequent credit. Secondly, the worker who are entitled to a tax credit should present the model 730 and recovering such credit in the month of July, rather than presenting the model Act and then recover the tax credit in the following year or by request refund to the Revenue, with the times that stretch.

10/01/2012

 

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Translated via software

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Source:

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